A Briefing.com article scooped up from a RB post:
ragingbull.com
January 10, 2000 ÿ
15:02 ET ******
Interdigital Communications (IDC) 54 7/8 +2 7/8 :
This little company, which traded for $5 just two months ago, is getting a lot of press as the "baby Qualcomm." The CEO, Howard Goldberg, was just interviewed on CNBC, where he did little to dispel this image. The problem, however, is that investors are taking the "baby Qualcomm" concept too seriously. IDC does own patents on CDMA technology, as well as TDMA patents. IDC did license patents to Qualcomm, back in 1996, as a setttlement of a dual patent lawsuit. But the royalty payment made by Qualcomm back then was a one-time fully paid up resolution of the patent ownership. IDC is not currently receiving fat royalty checks from Qualcomm for CDMA technology. This single misconception has been apparently widely spread, based on the emails and questions we have received. We haven't taken the time to read the hundreds of message boards to see if this misconception is being spread there, but it seems likely. IDC and Ericsson (ERICY) cross-sued each other back in 1993 regarding CDMA and TDMA patents. Some IDC investors expect to win, which might mean big royalties to IDC, but what if Ericsson wins? It is a risk, not a definite. IDC does have a patent licensing relationship with Nokia, whereby IDC is developing G3 technology (wireless data at broadband speeds), for paid-up royalties during the development period, engineering costs, and possible royalty payments in the future. But so far, that technology is all development stage. The difference between IDC and Qualcomm is so major it can't be overemphasized. Qualcomm established CDMA as a standard, then got a stroke of luck as the Chinese accepted CDMA as a standard, then decided to sell their infrastructure and handset business, and become an intellectual property company (regarding CDMA). In other words, they established the format first, then moved to the leveraged, royalty bearing model. IDC is entirely in the royalty bearing model, but the establishment of the G3 wireless technology hasn't happened yet. It is okay to think of IDC as a possible big winner if Nokia establishes IDC's wireless broadband technology, and pays a high royalty fee (IDC has not mad public details of the Nokia relationship), but it is simply erroneous to think of IDC as a "baby Qualcomm." Qualcomm is proven. IDC's future lies with the G3 broadband relationship with Nokia, and that, alas, is still a concept investment. - RVG |
